Elite Trader's Gambler's Anonymous ETGA

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Electric is getting overwhelmed with PM's. He has never received so many.

I personally would like to thank the community for not flaming this good Journal.

I do not know if its the moderator that is secretly doing his job, seamlessly, or in fact if the community respects civility and kindness. It has not been so, in the past.

There will be many more days of discourse in this Journal, and I look forward to coming here.

Thanks Electric, I love you.

I have a question: If you use a percent for the trade ticket and then you inject capital in stages during your forward test, are you not fooling yourself?

Wifey
 
I reduced the trade ticket drastically and put on a float. This is the beginning of the beginning to make it all more dynamic. I do not know if I have dropped the trade ticket too low which will effect yield....or if its still too high. Finding the balances proves still to be rather challenging. The acceleration must be controlled too.

It is absolutely necessary to have a cash subaccount during this, even after it is dialed in. This is not gambling and the unexpected value of infinity is always there. The subaccount is to provide a buffer for a one direction acceleration possibility. Granted a currency cannot go up or down in a straight line forever.

Michael B.

P.S. Remember, I am a trader who only expects 25% per year AFTER labor. You folks can dial in your trade ticket to be a fixed or variable. You can make it as high as you want. Its your "gambling meter" to manage. But I will tell you time is on your side if you believe flow>capacity.
 
Keep in mind this is a 5k account here that has reached 45.5% unrealized drawdown. This had to be drastically adjusted. I dropped it 2/3rds and added the float for a valid reason. The numbers in the spreadsheet will lag, while waiting for the chop. It was clear something had to be done, preemptively.

There is still a concern about the formula that is used to float with. Maximizing yield while staying in the zone is important. (zone = max drawdown to tolerate)

I have read from 30-40% is tolerable and realistic for this method. Perhaps this is too high for many and perhaps this can be improved on, time will tell. The goal is to get paid once a month and still be able to maintain the zone. Again this needs to be worth a traders time too.

The pool deck has grown to 0.0678 PIPs in the EUR/USD and 0.0574 PIPs in the USD/CHF. Actually the faster this grows is better as it will define the perameters for trading this system early on. Can you see that the wider this grows the longer it takes for the max drawdown to increase and for the subsequent trading to fall in the zone? It is impossible to visualize and this forward testing is needed. The size of unrealized drawdown, parity and initial investment all "play into" yield.

We seem to be discussing System#1 mostly. System#2 is a low labor method that requires little.

Michael B.


P.S. Slow and Steady and small changes (the magnification is strong in System#1)
 
Hi ES,

I like the idea of being a retail Market Market…good analogy.


Market Maker, Specialists, and yes, even Hardware Store shopkeepers know the value of their goods. And each one has it’s own way of determining market value. Market Makers and Specialists have their bids and offers and most importantly the size coming into market (Supply & Demand imbalances). Shopkeepers have their competitors pricing (bids,offers) and neighborhood requests (Supply and Demand) and special Vendor purchases at below the value area in which to determine what inventory to stock and at what price to sell. Neither Market Maker, Specialist, nor Hardware store owner just buy and sell for the hell of it. All of them "initiate" their purchases and sales when value is perceived.

Making money buying "inventory" involves being asymmetric not symmetric. asymmetry is what will compound profits.

And just as the Exchange Specialist sees change in Supply and Demand so to does the Hardware Store owner. When a shopkeeper sees customer preference change he must quickly decide the best way to handle any excess inventory. Usually, the smart shopkeepers, takes a loss on any remaining inventory and liquidate it by means of a “closeout” or some other store sale. Dollars turning and flowing are much preferred to dead or idle stock. Heck, good money was made in that product for many months or perhaps years, and now customer preference has changed.

The “trend” has changed.

His remaining inventory is liquidated and those dollars now “turn” in his new product line. And the cycle repeats.



Three Questions remain:

Q. How does one determine the direction of customer preference and "asymmetrically" initiate purchases and sales in that direction?

Q. How does one determine "value areas" for those purchases?

Q. When is it time to liquidate and closeout “old” inventory and begin anew?




Best Regards,
Dave Scott
 
Ahh....Mr. Scott..

How to optimize. You again have hit the sweet spot. You and Sympatico are a joy to read.

Let me go ponder for a while....

The second question/point has to do with time frame used. Sympatico calls it layering. I think this incremental trade placement addition together with my variable trade ticket could be awesome...what do you think? Ok this goes against my having less lines as a goal, but I may return to full time trading, someday. Yes Folks, I work at home and in between phone calls, I glance at my charts. I have a laptop on my bedstand too...I guess if I returned to full time trading I would need a partner to work in shifts with me and we would trade all 15 pairs...

Mark and the replies in his thread may of answered your third question/point with the center point of parity being reached....(in the Oanda thread titled, "my latest strategy") By the way Sympatico claims he never has taken out a trade, other than its target being reached.....I suppose a complete fresh start could be a scaling out too...

Sigh, the first question/point does not matter...for system#1...or.... I am missing something. This has been an earlier comment in other websites that confuses me. Why is a predicted direction necessary? Isn't that gambling? I suppose I could weight the trade ticket if I knew about direction in advance.

Michael B.

P.S Folks there is enough information, if put together, could compose a thick book.



Quote from wdscott:

Hi ES,

I like the idea of being a retail Market Market…good analogy.


Market Maker, Specialists, and yes, even Hardware Store shopkeepers know the value of their goods. And each one has it’s own way of determining market value. Market Makers and Specialists have their bids and offers and most importantly the size coming into market (Supply & Demand imbalances). Shopkeepers have their competitors pricing (bids,offers) and neighborhood requests (Supply and Demand) and special Vendor purchases at below the value area in which to determine what inventory to stock and at what price to sell. Neither Market Maker, Specialist, nor Hardware store owner just buy and sell for the hell of it. All of them "initiate" their purchases and sales when value is perceived.

Making money buying "inventory" involves being asymmetric not symmetric. asymmetry is what will compound profits.

And just as the Exchange Specialist sees change in Supply and Demand so to does the Hardware Store owner. When a shopkeeper sees customer preference change he must quickly decide the best way to handle any excess inventory. Usually, the smart shopkeepers, takes a loss on any remaining inventory and liquidate it by means of a “closeout” or some other store sale. Dollars turning and flowing are much preferred to dead or idle stock. Heck, good money was made in that product for many months or perhaps years, and now customer preference has changed.

The “trend” has changed.

His remaining inventory is liquidated and those dollars now “turn” in his new product line. And the cycle repeats.



Three Questions remain:

Q. How does one determine the direction of customer preference and "asymmetrically" initiate purchases and sales in that direction?

Q. How does one determine "value areas" for those purchases?

Q. When is it time to liquidate and closeout “old” inventory and begin anew?




Best Regards,
Dave Scott
More...
 
So your unrealised P/L is like your dept, and you want to hold it in "nominal terms" hopping your real account will grow faster with consistently increasing realised profits. Like a government with it's dept and economic growth (and/or inflation). It's nice. Risky but nice.

It seems it's a system that would benefit substentially from diversification. Spliting to as many currency pairs as you can. Accumulation of profits would be at a more predictable, less volatile, rate.
 
Thats what Sympatico says....(the diversification part, he might agree with you about the US gov't too :))


Quote from Maxprofit$:

So your unrealised P/L is like your dept, and you want to hold it in "nominal terms" hopping your real account will grow faster with consistently increasing realised profits. Like a government with it's dept and economic growth (and/or inflation). It's nice. Risky but nice.

It seems it's a system that would benefit substentially from diversification. Spliting to as many currency pairs as you can. Accumulation of profits would be at a more predictable, less volatile, rate.
More...
 
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